Income Growth Strategies for Preferred Securities

This document is a guide that discusses strategies for growing income through preferred and capital securities. It outlines the economic considerations companies face when deciding whether to allow a coupon to reset at a higher rate or to redeem a security at par and issue a new security at the market rate. The document explains how both options can be beneficial for investors seeking income growth. It details the current market environment, particularly the elevated U.S. Treasury yields, which create favorable conditions for hybrid securities. The guide also presents a case study on Citigroup's fixed-to-refixed perpetual preferred stock, illustrating the potential income advantages for investors when securities are redeemed at par. Additionally, it addresses risk considerations associated with fixed-income investments and emphasizes that past performance is not indicative of future results. The document concludes by stating that the information provided is general and not intended as specific investment advice.